Payment plans for customers

Discussion in 'Starting & Running a Business' started by Redwood, 29th May, 2019.

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  1. Redwood

    Redwood Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    691
    Location:
    Melbourne
    This is a small business with smart CF, that is all my clients are on direct debit and say 20% of revenue is on billing arrangements.

    I have one client say 10% of overall revenue, who is generally late - but pays.


    I issue invoices on 14 day payment terms. However here we have a significant creditor who cannot pay for up to 3 months (at least) - however, I am still doing the "work". That is all the risk is on me.

    I have never accepted a payment plan, however what sort of legal agreements are there for payment plans / arrangements for invoices outstanding? anyone care to share? generally, I have great customers and I don't get ripped off however i'm not stupid either - even customers of 5 years I am sceptical as to why they cannot settle an invoice when they have settled them at least "timely" in the past,

    Any suggestions?

    I will play hard ball on this one however want to ensure i am fair.

    Cheers Ivan
     
  2. Cate Bell

    Cate Bell Well-Known Member

    Joined:
    7th May, 2019
    Posts:
    221
    Location:
    Australia
    Don't know what your business is, but I take 50% upfront and 50% on completion (before they get the work). I have a watertight contract, a solicitor who oversees all contracts. In years of trading, I have one significant outstanding creditor who went under and we had competed the work, but because of one of my employees not taking the 50% upfront, it was a large loss. I now oversee everything!
     
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  3. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,095
    Location:
    Sydney or NSW or Australia
    Two scenarios to consider both real events.

    The first, the 'unsophisticated' tradie. Whenever he saw the terms of trade blowing out he slowly but surely restricted credit. This was done either by raising supply prices (quotes) to the builder and/or moving towards labour only contracts as materials costs were a major element in his business. Common sense & instinct saw him through close to 40 years in the business.

    The other, a more recent and 'educated' business owner who got 70%+ of his business from one regular customer. When the customer found an alternative supplier he needed to restructure and do the hard yards again to get several other clients to replace this one.

    Different situations call for different solutions.
     
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